In spite of the international turmoil, the Russian e-commerce market is still growing with cross-border sales to Russia jumping to $5 billion this year, up from $3 billion last year. However, while e-commerce flows from China is reaching new heights, the present troubled times have brought new difficulties – but also left many opportunities – to Western players.
A detailed study[1] by East-West Digital News, with the participation of Ernst & Young, PayU, Qiwi and Yandex, industry association NAMO as well as dozens of industry players including Alibaba Group, ASOS and eBay, reveals the following key trends:
- The substantial combination of AliExpress and Chinese eBay sellers has driven China to become the dominant force on Russia’s cross-border market.
- On the Western side, the market is growing more slowly this year due to the ruble’s fall and a shift in the behavior of the most patriotically-oriented Russian consumers.
- Shipment via postal operators may take weeks or even months, but the Russian Post’s service is improving slowly. Global carriers are being challenged by a new generation of Russian companies.
- While most shipments are currently tax-free, the expected changes in the customs legislationshould be extremely mild.[2]
- Contrary to widespread opinion, the level of fraud and refusals with bank cards is not higher in Russia than elsewhere, but loss to card fraud is growing fast.
Many foreign retailers and their service providers are concerned by new rules on personal data storage,[3] which will be allowed only on servers physically located in the Russian Federation starting from 2016.
As for Russia’s domestic online retail market, it is expected to reach approximately $18 billion this year, up 25% in rubles and 12% in USD from 2013. This growth rate is lower than during the previous years, but long-term expectations are still high: the domestic segment could reach $100 billion mark within 10 years.